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04/09/2006

On Lobbying and Campaign Spending-BECKER

The fundamental feature of the political process in any democratic society is that voters have only a weak self-interest to be informed on political questions that will come before candidates running for office, or on the details of the positions taken by these candidates. The simple explanation for this well known "rational ignorance" is that whether any voter supports or opposes particular candidates has a negligible influence over the outcomes of elections when hundreds of thousands, and even many millions, are voting.
Lobbying activities and campaign contributions try to fill this void by either directly trying to influence legislators, governors, and presidents, or by trying to persuade voters to support particular positions. They persuade by providing information and misinformation, and by changing attitudes and beliefs. They sometimes also try to influence elected officials by bribing them with gifts, money, and favors, and also by making campaign contributions that candidates can spend to try to help get elected.
The ignorance of voters implies that many different ways will be used to persuade them to vote in particular ways. Given the powerful and extensive role of government in society and the economy, one might expect that a large number of hours and many dollars would be spent influencing voters and officials. Yet as Posner indicates, what is remarkable is not how much is spent on lobbying and campaign contributions, but how little. Yes, the $3 billion spent in the 2004 presidential and congressional elections is a lot of money in an absolute sense, but it is peanuts compared to the Federal government's expenditures on different programs of over $2 trillion. It is also small relative to the thousands of regulations that directly and in many indirect ways affect business actions and personal decisions.
Posner tries to explain why lobbying and campaign spending is small relative to the important issues at stake. As he indicates, for many reasons the influence of additional spending on outcomes favorable to those doing the spending may be rather small. It remains somewhat puzzling, however, why this additional influence is so small.
Whatever the explanation, it is not clear to me why we should want to restrict spending and lobbying, aside from punishment for outright bribes, and for other forms of malfeasance by officials and contributors. Perhaps we do want to restrict how soon members of say Congress could work as lobbyists after they leave office. According to one study of a few years ago, over 40 per cent of a sample of members of Congress who left government to be active in the private sector eventually registered as lobbyists. Yet ex-legislators may be socially as well as privately helpful as lobbyists since they are familiar with the workings of the legislative process and have good personal contacts.
If as I (and Posner) believe) the essence of democracy is competition in the political process, that competitive process should include persuading and influencing activities. That is, competition in the market to influence political outcomes by persuading voters and legislators is the only effective way to produce checks and balances on points of view that reach voters and officials.
To be sure, the degree of competition is not perfect in lobbying or campaign contribution since some groups are able to collect much more money to spend than are other groups that have an equally vested interest in political decisions. But there are many other ways to influence votes and decisions. Newspapers also influence opinions, and a free press demands no controls over how much newspapers can spend trying to influence the opinions of readers on political issues. The Internet has thousands of bloggers and others who try to influence political opinion. They too are unregulated in order to provide competition in the expression of opinion. Many organizations, such as those with retird persons, encourage members to spend their time on influencing how official vote on particular issues. The use of time for political purposes is essentially also unregulated.
So why should legislation single out explicit lobbying and explicit campaign contributions, and neglect all the other ways of influencing political outcomes? Lobbying and contributing to campaigns are only one major source of persuasive and influence efforts in the vast competitive market that tries to influence political decisions.
Another way to make my point that there is excessive attention in the US to lobbying and campaign spending is to compare political outcomes here with those in Europe or Japan. All the data indicate that much more is spent on campaigning and lobbying in the US than in either of these other places. Yet it is not obvious that either Europe or Japan has better political outcomes, measured either by the quality of legislation, or by the response to public opinion. Indeed, I believe their outcomes are worse, or at least no better. That would suggest that the United States is excessively concerned about the relatively small level of resources that is spent on explicit lobbying and campaigning.

Comments

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Dr. Becker,

With all due respect, I think you make a fundamental error in assuming that the relatively small amount of money (compared to the government budget) spent on lobbying and campaign contributions by special interests means that bribes aren't really taking place (after all, if they were so profitable economic logic would dictate that much more money would be spent). What you fail to recognize is that there is some level of lobbying and campaign contributions that would raise a red flag so large that it would invite unwanted scrutiny. For example, if Exxon-Mobil gave $100 million to the Bush re-election campaign it would be front page news and put so much attention on the links betwee their interests and the Bush Administration that it would probably lead to lower returns. This means that there is a threshold at which contributions to politicians and money spent lobbying becomes too big to remain largely under the radar and the optimal amount is just enough to get a lot of what you want WITHOUT raising too many suspicions. Special interests do get returns of tens of thousands of a percent on their money- amounts most can only dream of- but they need to be careful not to exceed the threshold at which public outcry becomes too big. The system is inherently corrupt, but why give more money and lobby more when you get just about everything you want on the cheap anyway?

If as I (and Posner) believe, the essence of democracy is competition in the political process, that competitive process should include persuading and influencing activities.The fundamental purpose of the US constitution is to ensure that this competition in the political process is fair.In particular, the US constitution tries to ensure that we have a government by and for all the people - that no particular group of people (the nobility, the rich, a particular religious group, etc.) has excessive influence on the government. It is fundamental to the purpose of the US constitution to question whether lobbying gives certain groups excessive influence.More broadly, however, the technology now exists to make lobbying in its present form obsolete. In particular, the technology now exists to allow people to vote directly on important issues that come before the various branches of government.The government could set up a website where once a week people could log on and vote directly on five or so congressional bills and presidential executive decisions. As it is, a constituent is never sure whether their representative is going to vote they way that constituent wants.The default would be that the representative voted on the constituents behalf but if the constituent cared enough then the constituent could specify his or her vote directly. For example, a member of the House of Respresentatives that had one million constituents would have one million votes by default. If one third of the million constituents specified their votes directly then the representative would control the remaining two thirds of of the million votes.This could also work for important executive decisions. For example, unless there was a dire emergency where direct voting was not feasible, then a decision to go to war would have to be made directly by the people.This would be a lot of information for the constituents to handle but systems like wikipedia and slashdot style comment and comment ranking systems would allow the people themselves to craft summaries of the issues. This would essentially take the place of the lobbyists or, at the very least, the paid lobbyists would have to focus on lobbying the people directly.This would also solve the problem of gerrymandering. If one party managed to engineer small majorities in many districts and get memebrs of their party elected in many districts, this would be offset by the fact that the constituents in those districts could choose to specify their votes directly when they opposed the stance of the elected representative.The fundamental challenge in a majority rules democracy is protecting the rights of the minority and direct voting would do much to promote this.

3 billion is small when compared to the federal budget. The earth is small when compared to Jupiter. But 3 billion is not small compared to the relatively few number of people who make decisions on where that 2 trillion is going. What is important is what kind of results that 3 billion is getting.

I think you kind of wandered off on a tangent by comparing two numbers, one really big and the other really, really, big, but neither of which is a direct function of the other one.

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